Ralph Lauren quietly shuttered its two-year-old 20,000-square-foot store last week. Other brands are expected to close boutiques in a city that has lost its luster for cash-rich mainland Chinese tourists.

PARIS — Nicolas Ghesquière, one of the stars of the brand reinvention era, is exiting the house he helped rebuild.

In a development Monday that took many in the fashion industry by surprise, Balenciaga and the French designer said they had reached a “joint decision to end their working relationship,” effective Nov. 30.

The news came only a month after Ghesquière staged one of the most widely praised shows of the spring fashion season — and amid rumblings that the relationship between the designer and management had, after 15 years, soured and reached an impasse. For several years, Ghesquière was said to resent what he felt was a lack of support and funding for the brand — only exacerbated by increasing friction with chief executive officer Isabelle Guichot. In addition, resources committed to Hedi Slimane and the reinvention of Saint Laurent, while not a primary cause of Ghesquière’s departure, added to the tension.

PPR is believed to have been pressing for a more commercial direction at the house, which it had long seen as having the potential one day to rival Gucci and Bottega Veneta in sales volume.

“With an incomparable creative talent, Nicolas has brought to Balenciaga an artistic contribution essential to the unique influence of the house,” François-Henri Pinault, chairman and ceo of PPR, parent of Balenciaga, said in a brief press statement. “Cristóbal Balenciaga was a master, a genius whose avant-garde vision dictated fashion’s greatest trends and inspired generations of designers.”

Pinault, due to speak at today’s Pambianco conference in Milan, was not available for further comment Monday. He and other PPR officials had brushed off speculation that the designer and Balenciaga might be heading for a divorce when questioned about it during Paris Fashion Week.

Ghesquière is in Japan for a friend’s wedding and could not be reached for comment.

Guichot told WWD a successor would be named “as soon as we’re ready.”

“We have a short list,” she added, declining to identify potential candidates or give a deadline for making an announcement.

“My biggest interest is to focus the organization, accompany the team and develop the brand potential, so it’s in my interest to do it as soon as possible,” she said.

Guichot characterized the forthcoming change of creative leadership as “part of the life of a fashion house” and that Balenciaga and Ghesquière agreed, after discussions of long duration, to open “new chapters” in their respective development.

“We have huge ambitions and we have huge reserves of growth,” the executive said. “Year-to-date, we’re still at double-digit growth.”

Guichot noted that Balenciaga is a brand with strong codes recognized by consumers, and she stressed it still has room to grow via geographic, retail and product expansion.

Asked if Ghesquière’s exit could hurt Balenciaga’s momentum, she said the “brand is strong enough, developed enough and structured enough to express itself without fear,” she said. “Now the company is so mature in its organization, in its processes, the business is really moving forward.”

She also trumpeted the health of its ready-to-wear business, girded by six capsule collections — leather, knits, pants, T-shirts, silk and black dresses — along with its vintage reeditions line, known as Edition.

She declined to speculate on Ghesquière’s next move. “It was an incredible tenure for Balenciaga, in its creativity, its content, its length,” she said. “Nicolas has many talents, he needs to express his talent and I’m sure he will do so.”

Gucci Group, the precursor to PPR’s luxury division, acquired the Balenciaga business in 2001 from Groupe Jacques Bogart, a fragrance and fashion firm, with Gucci owning a 91 percent stake and Ghesquière holding the balance.

Guichot declined to say if Ghesquière still held shares in the company, and if so, if Balenciaga or PPR might acquire them. “All I can say is Balenciaga is already 100 percent fully integrated in PPR’s accounts.”

She also declined to comment on his current employment contract, which sources said expires sometime in 2013.

Among Guichot’s other pressing concerns is finding a temporary store for Balenciaga in Manhattan as its flagship in the Chelsea art district was “destroyed” by the storm surge engendered by Hurricane Sandy, and its forthcoming unit in SoHo isn’t slated to open until spring.

The exit of one of the industry’s most lauded and daring talents is sure to fuel discussion over the tug-of-war between business imperatives and creative expression.

The change also caps off a turbulent year at the highest levels of international fashion, with Christian Dior and Yves Saint Laurent among French brands bringing in new creative directors.

Ghesquière has been creative director of Balenciaga since 1997, transforming it into one of the most influential French brands and most coveted tickets during Paris Fashion Week.

His rapid-fire shows delivered a fashion message as direct as a bullet, spectacular in their workmanship and imagination. He had a penchant for futurism and the Eighties, while also exploring key silhouettes and themes from Balenciaga, a Spaniard who founded his couture house in 1919 and established himself in Paris in 1936.

Despite international fame, Balenciaga closed his couture business in 1968, leaving licensed fragrances as the main business. He died in 1972.

Ghesquière’s next career move could not be learned, but the sudden availability of such a high-profile talent is sure to attract the attention of rival luxury groups.

Dior heavily courted Ghesquière last year as it sought to replace its disgraced couturier John Galliano, ousted in the wake of racist and anti-Semitic outbursts. Dior ultimately opted for Raf Simons, another media darling who had been shown the door at Jil Sander a few months earlier despite an acclaimed seven-year stint at that Milan-based brand.RELATED STORY: Dior Spring 2013 >>

Meanwhile, YSL, also owned by PPR, ultimately took on designer Hedi Slimane, without a label since he exited Dior Homme in 2007, to succeed Stefano Pilati.

Sources speculated that Ghesquière might wish to mount a signature brand, an ambition he had stated many times while ensconced at Balenciaga.

The sudden vacancy at Balenciaga is bound to ignite a guessing game about who might take his place in one of the plum seats in Paris. According to sources, Alexander Wang and Joseph Altuzarra could be among the candidates, given their press following and modernist fashion leanings. Kostas Murkudis and Bouchra Jarrar, an alumna of Balenciaga, are among lesser-known possibilities.

According to sources, talent scouts at PPR have also been keeping an eye on hot talents in London, who include Mary Katrantzou, Christopher Kane, J.W. Anderson and Thomas Tait.

Lazaro Hernandez and Jack McCollough of Proenza Schouler were others mentioned as possible candidates, although other sources dismissed that possibility given their new ownership and the designers’ focus on building their own brand.

Whomever PPR chooses will walk into a sizable business that now counts 62 directly operated stores and a new fragrance fronted by “Twilight” actress Kristen Stewart. This year, the brand strengthened its presence in Asia, opening stores in Mainland China to bring its complement there to 11.

At a recent press day here, PPR group managing director Jean-François Palus noted that Balenciaga has multiplied in size by 11 times since it was acquired.

Parent of Gucci and Bottega Veneta, PPR does not break out figures for its other luxury brands, which include Stella McCartney, Boucheron, Alexander McQueen and Sergio Rossi. In the third quarter, the division posted sales growth of 45.6 percent, with all brands and regions contributing to the performance. In comparable terms, sales were up 15.5 percent.

“Momentum remained especially strong for fashion and leather goods, which achieved growth of more than 13 percent in the quarter, driven by outstanding success of the designer brands and the very solid performances of Brioni and Sergio Rossi,” PPR stated at the time.

In the first nine months of the year, other brands recorded a sales rise of 60.8 percent in reported terms and of 18.8 percent in comparable terms.

Earlier this year, PPR chief financial officer Jean-Marc Duplaix had cited a “strong” performance at Balenciaga in the first quarter.

Hailing from the small French town of Loudun and without any formal fashion training, Ghesquière got his start in fashion by filing, photocopying and cataloguing fabrics at Jean Paul Gaultier, ultimately landing at Balenciaga and designing lowly licensed lines, including office uniforms, bridal gowns and widows’ dresses for Japan.

Once promoted to the helm of the ready-to-wear line in 1997, succeeding Josephus Thimister, he quickly won acclaim for sculpted designs straddling futuristic and Parisian chic.

For three seasons straddling the Millennium, he also designed collections for the Milan-based house of Callaghan.

Tom Ford and Domenico De Sole, then creative director and ceo of Gucci Group, respectively, brought Ghesquière into the fold, eager to turn his rising profile into profits.

“We do feel that it is a wonderful brand, but you do need to secure good design talent, and Nicolas Ghesquière is a star,” De Sole told WWD at the time.

While primarily known for his creative prowess — and at times criticized for his elitist, exclusive approach to fashion — Ghesquière frequently took pains to show that he was not opposed to big business, even occasionally taking the powers to be at Gucci Group and PPR to task for holding him back.

“Even if we’re not a priority in the group — and that’s clear we’re considered a small brand — I still want to prove that we can be bigger than that,” he said in a 2005 interview, stressing that capsule collections for pants and knits, introduced that year, were 100 percent his idea.

“It’s not a marketing strategy, and it’s not coming from someone else. You don’t sign on with these kinds of groups if you don’t want to do business and make money,” he said at the time. “I like to experiment, but I also like to make beautiful, wearable clothes. I always mix them.”

Back in 2000, Ghesquière introduced a much-demanded, logo-free handbag with braided handles and dangling zipper pulls, and the style is still seen in the streets all over the world, though overshadowed by more recent “It” bags.

He is seen as a pioneer in linking fashion and art long before they became cozy bedfellows, tapping French contemporary artist Dominique Gonzalez-Foerster to codesign his otherworldly Balenciaga boutiques and planting them where you least expect them: next to the former Dia Center in New York or on a forgotten street in central Milan, for instance.

He also helped fan the trend to extreme footwear, and often influenced fashion from the designer level down to the high street.

Several market sources characterized Ghesquière as uncompromising in his futuristic vision for the brand. “Nicolas is one of a small coterie of designers, who in spite of the general progress of the world, seems unwilling to address the demands of communication and marketing. It seemed to me that his attitude to protecting exclusivity was at odds with the general focus of the rest of the group,” said one industry source, who spoke on condition of anonymity.

Another source claimed that Balenciaga has been overly dependent on its handbag business, and unable to convert Ghesquière’s designs into commercial categories. “There was so much editorial noise around the collections, and a few key reporters decided to champion him. And maybe the more noise there was, the more he felt he needed to push himself and take risks. His ideas were regularly copied — it was directional but never commercial,” the source said.

French designer Pierre Hardy, a friend of Ghesquière’s who collaborated with him on shoes at Balenciaga, said he had no sense of any internal discord at Balenciaga or PPR.

“This might be exactly the right moment for him [to leave the house],” Hardy said. “The collection was a commercial success and a critical success. He is at the zenith. He probably felt in a cage. It was too small for him.”

Retailers expressed regret at fashion’s latest divorce.

“I think it’s a shame for Balenciaga. I really liked what Nicolas Ghesquière did. I don’t know who else can bring that modernity to the brand, and I was a big, big fan of his passion for colors and fabrics,” said Martine Hadida, women’s wear buyer for L’Eclaireur in Paris. “He did a great job. I loved the modernity of the collections. We had good results with the Balenciaga collection. The pieces we chose for L’Eclaireur sold very well.”

Marie-Amélie Sauvé, the Paris-based stylist, fashion editor and consultant who collaborated with Ghesquière since the start of his career at Balenciaga, said it was impossible for her to imagine the brand continuing without the man who defined and energized its image for 15 years.

“He made Balenciaga. Balenciaga and Nicolas are the same thing,” she said, calling the brand too small for his talent. “He deserves more than that because he is the biggest designer of our times. His signature is so strong, so unique.”

“It is a little hard to believe as he is so linked to the house,” said Daniella Vitale, chief operating officer and senior executive vice president of Barneys New York. “What a transformation and an indefatigable talent. He seemed to get better every year but the company has a very strong, talented management team and they are incredible partners.”

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